I own a rare book company, B & B Rare Books, which means I buy and sell old books- first editions of Pride and Prejudice, The Catcher in the Rye, signed Hemingway novels. I co-own B & B with my husband: just the two of us, we are the very definition of a small business. We started in 2003 with the goal of creating extra income, quit our day jobs in 2007 and have never looked back. We’re young people in a “graying” trade, learning from veteran sellers while adapting the business to the 21st century. Find us on Facebook/B & B Rare Books. Email me at: sunday@bbrarebooks.com

How To Start Your Business Without A Loan

Interested in starting your own business but hesitant to take out a huge business loan? While it can be difficult to start a company with little capital, it is absolutely possible. In some ways, it can even be less risky and less complicated.

Here are some ways to build up your company from scratch:

1. Keep Working Another Job – If you’re not getting instant cash by taking out a business loan, your startup capital will have to come from your savings. Set money aside, separately from other savings, in amounts that you won’t miss on a daily basis. Your savings will only grow if you don’t draw on it for living expenses or other necessities.

When you’re ready to start your business, it could benefit you to keep your job at the outset, as keeping your salary while you’re starting up can take a lot of the pressure off of your first few months, or years, in business. And the benefits don’t end at your salary—your health insurance, retirement plan, and sick/vacation days are all things that you’ll have to pay for on your own when you’re self-employed.

2. Reinvest Your Profits Back Into Your Business – Using your profits to pay for living expenses or to pay down other debts will limit how fast your company can grow. You’ll maintain your highest level of working capital if you reinvest your profits back into your business. Whether you invest in new products, technology, or employees, your goal is to grow your business by attracting new and more customers. You can also choose to invest in marketing or advertising to grow your customer base.

3. Keep Your Overhead Low – You won’t need a huge business loan if you keep things small at the start, and grow organically. If you can get away with working at home, or not needing to rent a space or invest at the outset in new technology, you can keep your overhead low, therefore not needing to cover huge bills at the outset when you could be investing your profits into your business instead. If you can keep your overall running expenses on the low end, this will help you be better able to reinvest your profits back into your company. Once your company starts to grow and your income becomes more reliable, you can start to take on larger overhead costs without it slowing your rate of growth.

I started my rare book company with one book and less than $100. By reinvesting the profits from the first few sales into more inventory, I quickly learned that growing slowly yet steadily would allow me to stay in business without having to take out a loan. Working from home kept my overhead low, as I didn’t need to pay for additional rent or utilities. For my first five years in business, I kept working my day job, which easily covered my living expenses, so the business could grow organically from its own profits.

Early on, it was also psychologically liberating not having to worry about any money I owed, which let me feel safer taking risks. By the time I quit my day job and went full time with my business, it was sustaining itself while providing for my living expenses, and was in a place where it could grow bigger and stronger with the more time I put into it.

Starting a business without a loan has its limitations, but it can also lessen the risk involved. It can be a good way to test out the world of entrepreneurship, trying out your ideas and testing new markets. You can also feel more confident learning from your mistakes, knowing you have a safety net underneath you.

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